Foreign investment into SA leaps to R40 billion

Foreign investment into SA leaps to R40 billion
Foreign Direct Investment (FDI) into South Africa had increased significantly from R5.1 billion in 2004 to R40.7 billion in 2005, according to the Reserve Bank’s 2006 Annual Economic Report released in Pretoria on Wednesday. The bulk of inward direct investment was registered in the third quarter of 2005 when the United Kingdom-based banking group Barclays acquired a 60 percent controlling stake in South Africa’s ABSA. Barclays paid R30 billion for their stake in the local bank. The FDI was further propelled earlier this year when British company Vodafone acquired a substantial interest in Vodacom, a South African local mobile phone operator. Vodafone, which initially owned 35 percent of Vodacom, lifted its stake by acquiring VenFin’s shares worth about R21 billion, effectively becoming a 50 percent shareholder in the local company. The report said direct investment into the country was encouraged by favourable domestic growth prospects as well as sound monetary and fiscal policy, which improved price stability and the investment climate. “In 2005 portfolio capital flowed into South Africa in the form of equity investment, while non-residents were net sellers of South African bonds. “The inflow of share capital gained further momentum in the first four and half months of 2006 as the prices of commodities and shares soared.” The international investor sentiment, however, turned away from emerging market securities and currencies in May 2006, resulting in currency depreciation, a fall in share prices and an increase in bond yields within those markets, said the Bank.
Hanlie De Waal